EUROPE – Selected Country Characteristics

UK: mobile boosts Omni and Online retail

Online shoppers in the U.K. spent GBP104bn (US$171.6bn) last year, up 14% compared to 2013. Those shoppers more often are buying via tablets and smartphones—and more and more picking up their online orders inside stores – “click and collect” – which now accounts for around 35% of all online retail sales. Much of this success can be attributed to the growing influence of m-retail: almost 60% of UK consumers have a smartphone and sales via mobile devices (smartphones and tablets) are estimated to have reached 18% of all online retail sales in 2013 and almost doubled in 2014 to around 30%.

The UK e-commerce market is a highly competitive market and UK e-shoppers are the highest online spenders in the world with just under GBP 2,500 (USD 4,125) per capita. The share of online in total retail is estimated to have reached 16.8% this year, again the highest in the world.

The UK is the largest online retail market in Europe and third in the world after the USA and China, which country’s B2C e-commerce sales surpassed the UK in 2014.

Germany: a growing mature market

Germany generated an estimated 17% of European e-commerce turnover and is forecast to grow 17% in 2014 to reach US$91bn in 2014. With more than 42 million (two-third of Germany’s population between 15 and 74 years) digital buyers in 2013, forecast to rise to almost 46 million in 2016, Germany enjoys the greatest e-commerce customer potential after Russia, offering major opportunities for international online retailers and service providers alike.

Germany’s highly developed logistics infrastructure, ranked three on the Logistics Performance Index 2014, just after Singapore (1) and the Netherlands (2), makes it easy for companies to offer their e-commerce services. A concentrated network of logistic centres enables to offer services like same-day delivery.

The increasing B2C traffic results in higher total shipment costs as deliveries are more decentralised with smaller quantities per stop. An important issue is the high rate of returns experienced by most online retailers and distance sellers. Germans are return champions: 40% of customers already take returns into account when purchasing online. Therefore, innovative delivery methods can put companies ahead of the competition. International companies supplying these kind of innovative solutions to address these challenges are highly valued partners for German companies.

Offering trusted payment options is highly important for German e-shoppers.

German online shoppers are often regarded as risk-averse customers, preferring full payment services with grace periods for invoiced amounts.

Mobile shopping was estimated to account for 10% of all e-commerce in 2013 and rapidly growing this year.

Germany is the third most active country worldwide both in import and export e-commerce, third to only the US and the UK. German online shoppers mostly buy cross-border from the UK, the US and China.

France: online retail shows continued great potential

With online retail sales estimated at just over US$32 billion in 2013, the sector initiated positive developments in recent years notwithstanding the still faltering economy. Online retail sales in France are forecast to increase around 40% to reach US$45 billion by 2015.

The potential of the market is also reflected in the growing number of online customers, reaching 33.8 million at the end of 2013, up from 32 million in 2012. With a rate of 84% of French households having access to the Internet and an ever-growing number of online shoppers, there are still plenty of growth opportunities. Especially when taking into account the fact that the French market is about four times the Dutch market.

Online sales now account for 6.7% of the total French retail market. House equipment (including consumer electronics) and fashion, shoes and textiles have the biggest market shares (18% and 12%). Amazon, Cdiscount, FNAC, eBay and Priceminister were the most visited e-commerce sites in France during 2013.

In our view – and we are certainly not the only ones – the French market has great potential and offers many possibilities for foreign entrepreneurs, A number of specific characteristics are essential to take into account and to guarantee success, such as for instance the fact that so far apart from Amazon, eBay and Zalando – there are not many foreign online retailers which have really achieved a presence on the French market. However, today the country is one of the most dynamic markets in Europe, which offers great opportunities to conquer this interesting market.

Scandinavia, a mature retail and e-commerce market

The Scandinavia market consisting of Denmark, Finland, Norway and Sweden might be relatively small compared to Germany, France and the UK; it is a highly mature retail and e-commerce market with similarities and local differences. They all have an Internet usage penetration of above 90% and the share of e-shoppers of the active 15 to 74 years old population is around 80%. According to the PostNord survey “e-Commerce in the Nordics 2014” reasons for shopping online are convenience, ease of use and shopping van be done at any moment of the day. A major trend in Scandinavia is the rapid penetration of omni-retailing, the integration of on- and offline channels.

Most trading is done with domestic companies, but consumers more and more look around at foreign sites not in the first place with their Scandinavian neighbours but with the UK and the US.

On average 36% of Nordic residents shopped abroad, while more than 45% of Norwegians did so. Most purchased items are clothing, home electronics and books. m-Commerce accounted for around 20% of all online sales in the Nordics in 2014.

An estimated 16.7 million Nordic residents bought goods and services online in 2014 for a total of US$45.7bn, or an average spend online of over US$ 2,700. It The share of online retailing was around US$24,625.3bn or 9.0% of total Scandinavian retail. Denmark is leading with an online retail share of over 11%.

Poland: dynamic market leader in Central Eastern Europe

e-Commerce in Poland is one of the most dynamic segments of Polish economy, developing at double-digit rate for a couple of years now. Polish consumers not only choose online shopping more often but also have started using mobile devices to buy items. In addition, Poles’ propensity to e-shopping has put the country ahead of the region in terms of the penetration of online.

The Polish e-commerce market is by far the largest in Central Eastern Europe not only because of the number of internet shoppers but also because of the highest share of internet users interested in shopping online (80%), way ahead of the other CEE countries.

Polish e-commerce is set to grow further in 2014 between 15% and 20%. Internet retailers will invest into projects increasing their revenues through further optimisation of online sales and delivery processes, as well as in gradual broadening of the range of products available.

In addition, since November 2013, Poland is one of the seven countries worldwide where Google offers its price engine, Google Shopping. Google’s interest in investing in Polish e-commerce illustrates well that the Polish market is perceived to be an interesting and promising one for international companies.

Russia; the awakening giant

The volume of the Russian e-commerce market is estimated to reach around 670bnRUB (US$18.8bn) more than double the size in 2011. The market is forecast to grow between 20 and 30% in the coming years. Russia has by far the largest number of Internet users estimated at around 85 million at the end of 2013 coming from 29 million in 2007. The number of e-shoppers reached 30 million, around 25% of the 18+ population.

The behaviour of Russian online consumers largely repeats buyers’ steps in Western markets, but at a slower pace: half of the regular e-shoppers in Russia only started making online purchases in the last two years. Russian e-commerce has the need, the potential and the room to grow. The reasoning is the continuing growth of the number of Internet shoppers in Russia, the rapid increase of bank card users and a growing more affluent middle class population.

The most recent report of Data Insights identified the following trends for Russian e-commerce this year:

The market is set to grow by 25% to 30% in the coming years;

The regions are catching up and pioneering retailers are generating already over two/thirds of their sales in the regions;

Major retailers are embracing e-commerce;

As the performance of the Russian Post is deteriorating, alternative delivery service providers are now serving most large and mid-sized cities;

Cash-on-Delivery is still prevailing but the use of electronic payments is on the rise.

The estimated share of cross-border e-commerce in Russia was RUB100bn -approx. USD3bn- or around 20% by the end of 2013. Approximately 15% Russian online shoppers buy goods from China, Europe, or US-based online stores. On average, they buy products from abroad about 4 times per year. This shows that cross-border sales are growing rapidly, but foreign merchants have to adapt their market approach and deal with customer clearance and delivery issues.

Russia remains a highly interesting and promising market to do business, both for retailers and online only retailers. However as the country is also highly complex to do business, it is in our view essential when entering this huge and attractive market to find a reliable local partner who has experience, knows the market and consumer mentality and may guide and closely accompany new entrants to successfully enter this highly potential market.

Turkey: a highly promising, emerging market at the crossroads of Europe and the Middle East

Turkey’s e-commerce market is young, emerging and highly promising. More than half the population is under 30 and keen to go online and actively use the internet. There are 36 million internet users in Turkey. 10 million of them actively shop online. And 2 million more are expected to join in 2014.

B2C online shopping is becoming popular increasingly, reaching an estimated 18 billion TRL in 2013. In 2014, e-commerce is forecast to grow between 20 and 30%. The share of B2C in total retail is still low at around 2%, but rapidly growing. As total retail is expected to grow more than 8% in 2014 this bodes well for the future of retail in this dynamic country.

Tickets and hotel reservations at 66% of B2C online purchases drive the B2C e-commerce market. The most searched for category is electronics and appliances. This rapid forecast growth is boosted by one of the highest credit card penetrations in Europe, excellent logistics, high use of mobile Internet and social networks.

Turkey currently ranks lowest in Europe for cross-border ecommerce purchases in Europe; only 4% of all online shoppers purchase cross-border. However, overseas investors are turning their attention to Turkey in the form of joint ventures and acquisitions.

Turkey is an important geographical gateway: it is within the EU free trade area; it has free trade agreements with the Gulf States and shares many connections including a widespread use of the Arabic language. It is also the gateway to the Eastern European countries, such as Bulgaria. Due to the cultural mix of European and Middle Eastern lifestyles, the consumer profile in Turkey gives valuable insights into target consumer preferences, while facilitating smooth expansion toward both those territories.